​Health Insurance For The Self-Employed

Staff Reporter
Aug. 5, 2014

Health Insurance For The Self-Employed - Many people who become self-employed have a lot of health insurance options. They can shop many companies and even take initial steps of extending their employer-sponsored benefits through COBRA.

The Consolidated Omnibus Budget Reconciliation Act of 1985 allows workers to extend those benefits for up to 18 months after leaving a job.

However, the down side: employers no longer pay their portion of the plan’s premium, which can be anywhere from 75 to 80 percent of a plan’s premium, which can often be 75 to 80 percent or more of a plan’s cost. By keeping the coverage and paying the employer portion, you’ll likely see a huge difference in what you pay for the coverage.

Another option would be to buy an individually underwritten policy on the open market. If your family health history is clean, it’s simply a matter of finding a policy that offers a mix of benefits and costs that work for you. Make sure to choose a plan with adequate benefits to protect both your family and your assets. Most bankruptcies in this country are caused by unexpected medical emergencies combined with inadequate protection.

If you’re married, and your spouse is covered under another employer’s group health insurance plan, you may be able to get family coverage that’s less expensive than buying it through the private market. One significant advantage of such coverage is that when your spouse adds your family to his or her coverage, the additional coverage usually cannot be denied - or premiums rated up - because of health history.

A few states, such as New York and Massachusetts, have what is called guaranteed-issue health insurance. In those states, companies doing business in the state must offer you the opportunity to purchase insurance coverage regardless of your health history. What that means can vary somewhat by state statute.In some states, eligibility may be restricted to those who can show continuous coverage, meaning that you must already have a plan to be able to apply and move to the guaranteed issue plan.

For years, individuals who have been denied individual health insurance coverage because of a pre-existing medical condition have had the option of turning to state-sponsored health insurance risk pools for coverage. The bad news was that the usefulness of the state plans varied considerably by from state to state. Some states offered solid plans with costs slightly higher than open-market costs, while other states offered plans that were under-funded or poorly planned.

A great benefit to health insurance for people who are self-employed is the tax deduction. They can deduct the cost of their health insurance premiums from their federal taxable income. This puts the self-employed on equal footing with big business, which has long been able to count health insurance premiums as a business expense.

Some people have joined ADP to handle their self-employment payroll taxes and health insurance. The company has a large plan that might be cheaper than buying an individual plan. Always shop around before making a long-term decision like this one.

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